Remarks by Secretary Gates at a Meeting of the Economic Club of Chicago

It's an honor to be at the Economic Club of Chicago, and I certainly appreciate the special arrangements you have made to allow me to be here this afternoon.And I want to thank all the distinguished citizens of this great city who are here today.

I'm also mindful that I'm speaking in the hometown of my boss. (Laughter.)And President Obama sends his greetings, as do Rahm Emanuel and David Axelrod and the rest of the Chicago crew. (Laughter.)They are no doubt discovering that Washington is the true windy city -- (laughter, applause) -- a place where those who travel the high road of humility encounter little heavy traffic -- (laughter) -- the only place in the world you can see a prominent person walking down Lovers' Lane holding his own hand.(Laughter.)

The issue that brings me here today is central to the security of all Americans:the future of the United States military, how it should be organized, equipped and funded in the years ahead to win the wars we are in while being prepared for threats on or beyond the horizon.

Earlier this year, I recommended to President Obama, and he enthusiastically agreed, that we needed to fundamentally reshape the priorities of America's defense establishment and reform the way the Pentagon does business -- in particular, the weapons we buy and how we buy them -- above all to prepare to wage future wars rather than continuing the habit of rearming for previous ones.

I'm here on relatively short notice to speak publicly about these matters because the Congress is, as we speak, debating the president's defense budget request for the next fiscal year, a budget request that implements many needed reforms and changes.Debating the president's defense budget request for the next fiscal year, most of the proposals, especially those that increase support for the troops, their families and the war effort, have been widely embraced by both parties.

However, some of the crucial reforms that deal with major weapons programs have met with less-than-enthusiastic reaction in the Congress, among defense contractors and within some quarters of the Pentagon itself.

And so I thought it appropriate to address some of these controversial issues here, in a place that is, appropriately enough, not only the adopted home of our commander in chief, but also a symbol of America's industrial base and our economic power.

First some context on how we arrived at this point.President Obama's budget proposal is, I believe, the nation's first truly 21st century defense budget.It explicitly recognizes that over the last two decades the nature of conflict has fundamentally changed, and that much of America's defense establishment has yet to fully adapt to the security realities of the post-Cold world -- post-Cold War world and the complex and dangerous new century.

During the 1990s, the United States celebrated the demise of the Soviet Union, and the so-called end of history, by making deep cuts in the funding for and, above all, the size of the United States military, including a 40-percent reduction in the size of the United States Army.This took place even as a post-Cold War world grew less stable, less predictable and more turbulent.

The U.S. military, with some advances in areas such as precision weaponry, essentially simply became a smaller version of the force that held off the Soviets in Germany for decades and expelled Iraq from Kuwait in 1991.There was little appetite for, or interest in, preparing for what we call "irregular warfare" -- campaigns against insurgents, terrorists, militias and other non-state groups.This was the bipartisan reality both in the Congress and in the White House.

Of course, after September 11th some things did change.The base defense budget, not counting spending for the wars, increased by some 70 percent over the next eight years.During this period there were important changes in the way U.S. forces were organized, based and deployed, and investments were made in new technologies such as unmanned aerial vehicles. However, when all was said and done, the way the Pentagon selected, evaluated, developed and paid for major new weapons systems and equipment did not fundamentally change, even after September 11th.

Indeed, the kinds of equipment, programs and capabilities needed to protect our troops and defeat the insurgencies in Iraq and Afghanistan were not the highest priority of much of the Defense Department, even after several years of war.

I learned about this lack of bureaucratic priority for the wars we are in the hard way -- during my first few months on the job, as the Iraq surge was getting under way.The challenges I faced in getting what our troops needed in the field stood in stark contrast to the support provided conventional modernization programs -- weapons designed to fight other modern armies, navies, and air forces, programs that had been in the pipeline for many years and had acquired a loyal and enthusiastic following in the Pentagon, in the Congress and in industry.

The most pressing needs of today's warfighter -- on the war -- on the battlefield, in the hospital, or at home -- simply lacked place and power at the table when priorities were being set and long-term budget decisions were being made.

So the most important shift in President Obama's first defense budget was to increase and institutionalize funding for programs that directly support those fighting America's wars, and their families. Those initiatives included more helicopter support, air lift, armored vehicles, personnel -- personal protection equipment, and intelligence, surveillance and reconnaissance assets for our troops in Afghanistan and Iraq.In addition, we also increased the funding for programs that provide long-term support to military families and treatment for the signature wounds of these wars, such as traumatic brain injury and post traumatic stress.

But while the world of terrorists and other violent extremists, the world of insurgents and IEDs, is with us for the long haul, we also didn't recognize that another world has emerged.Growing numbers of countries and groups are employing the latest and increasingly accessible technologies to put the United States at risk in disruptive and unpredictable ways.

Other large nations -- known in Pentagon lingo as "near-peers" -- are modernizing their militaries in ways that could over time pose a challenge to the United States.In some cases, their programs take the form of traditional weapons systems, such as more advanced fighter aircraft, missiles and submarines.

But these other nations have learned from the experience of Saddam Hussein's military in the first and second Gulf wars that it is ill-advised, if not suicidal, to fight a conventional war head-to-head against the United States, fighter-to-fighter, ship-to-ship, tank-to- tank.They also learned from a bankrupted Soviet Union not to try to outspend us or match our overall capabilities.

Instead, they are developing asymmetric means that take advantage of new technologies, and our vulnerabilities, to disrupt our lines of communication and our freedom of movement, to deny us access, and to narrow our military options and strategic choices.

At the same time, insurgents and militias are acquiring or seeking precision weapons, sophisticated communications, cyber-capabilities and even weapons of mass destruction.The Lebanese extremist group Hezbollah currently has more rockets and high-end munitions -- many quite sophisticated and accurate -- than all but a handful of countries.

In sum, the security challenges we now face and will in the future have changed, and our thinking must likewise change.The old paradigm of looking at a potential conflict as either regular or irregular war, conventional or unconventional, high-end or low-end is no longer relevant.And as a result, the Defense Department needs to think about and prepare for war in a profoundly different way than what we have been accustomed to throughout the better part of the last century.

What we need is a portfolio of military capabilities with maximum versatility across the widest possible spectrum of conflict.As a result, we must change the way we think and the way we plan, and fundamentally reform the way we do business and buy weapons.It simply will not do to base our strategy solely on continuing to design and buy, as we have for the last 60 years, only the most technologically advanced weapons to keep up with or stay ahead of another superpower adversary, especially one that imploded nearly a generation ago.

To get there, we have to break the old habit of adding layer upon layer of cost, complexity, and delay to systems that are so expensive and so elaborate that only a small number can be built, and that are then usable only in a narrow range of low-probability scenarios.

We must also get control of what we call requirements creep, where more and more features and capabilities are added to a given piece of equipment, often to the point of absurdity.The most flamboyant example of this phenomenon is the new presidential helicopter -- what President Obama referred to as defense procurement run amok.Once the analysis and requirements were done, we ended up with helicopters that cost nearly a half a billion dollars apiece and enabled the president, among other things, to cook dinner while in flight under nuclear attack.(Laughter.)

We also had to take a hard look at a number of weapons programs that were grotesquely over budget, were having major performance problems, were reliant on unproven technology or were becoming increasingly detached from real-world scenarios, as if September 11th and the wars that followed had never happened.

Those of you with experience in the technology or manufacturing sectors have at some point probably faced some combination of these challenges in your own businesses.But in the defense arena, we faced an additional, often insurmountable obstacle to bring rationality to budget and acquisition decisions.Major weapons programs, regardless of their problems or performance, have a habit of continuing long after they are wanted or needed, recalling Ronald Reagan's old joke that a government program represents the closest thing we'll ever see on this Earth to eternal life.(Laughter.)

First, there is the Congress, which is understandably concerned, especially in these tough economic times, about protecting jobs in certain states and districts.There is the defense and aerospace industry, which has an obvious financial stake in survival and growth of these programs.

And then there is the institutional military itself, within the Pentagon and as expressed through an influential network of retired generals and admirals, some of whom are paid consultants to the defense industry, and some who are often quoted as experts in the news media.

As a result, many of past attempts by my predecessors to end failing or unnecessary programs have gone by the wayside.Nonetheless – perhaps in a triumph of hope over experience – I determined, and the president agreed, that given the urgency of the wars we are in, the daunting global security environment we will inhabit for decades to come and our country's economic problems, we simply cannot afford to move ahead with business as usual.

To this end, the president's budget request cut, curtailed or ended a number of conventional modernization programs -- satellites, ground vehicles, helicopters, fighters -- that were either performing poorly or in excess to real-world needs.Conversely, future-oriented programs where the U.S. was relatively underinvested were accelerated or received more funding.

For example, we must sustain and continually improve our specialized strategic deterrent to ensure that our and our allies' security is always protected against nuclear-armed adversaries.And so in an initiative little noticed, the president's program includes money to begin a whole new generation of ballistic missile submarines and nearly $700 million in additional funds to secure and assure America's nuclear deterrent.

Some of our proposed reforms are meeting real resistance.They are called risky, or not meeting a certain military requirement, or lacking in study and analysis.Those three words -- requirements, risk and analysis -- are commonly invoked in defense matters.If applied correctly, they help us make sound decisions. I've found, however, that they more often have become the holy trinity of the status quo or business as usual.

In truth, preparing for conflict in the 21st century means investing in truly new concepts and new technologies.It means taking into account all the assets and capabilities we can bring to the fight.It means measuring those capabilities against real threats posed by real world adversaries with real limitations, not threats conjured up from enemies with unlimited time, unlimited resources and unlimited technological acumen.

Air superiority and missile defense, two areas where the budget has attracted the most criticism, provide case studies.So let me start with the controversy over the F-22 jet.

We had to consider, when we were preparing for a future potential conventional state-on-state conflict, what is the right mix of the most advanced fighter aircraft and other weapons to deal with the known and projected threats to U.S. air supremacy?

For example, we now have unmanned aerial vehicles that can simultaneously perform intelligence, reconnaissance and surveillance missions as well as deliver precision-guided bombs and missiles.The president's budget request would buy 48 of the most advanced UAVs, aircraft that have a greater range than some of our manned fighters, in addition to the ability to loiter for hours over the target.And we will buy many more in the future.

We also took into consideration the capabilities of the newest manned combat aircraft program, the stealth F-35 joint strike fighter. The F-35 is 10 to 15 years newer than the F-22, carries a much larger suite of weapons, and is superior in a number of areas -- most importantly air-to-ground missions such as destroying sophisticated enemy air defenses.

It is a versatile aircraft.It costs less than half what the F- 22 costs.And it can be produced in quantity with all of the advantages of economy of scale.Some 500 will be bought over the next five years, more than 2,400 over the life of the program.And we already have eight foreign partners who are committed to buying them along with us.

The F-35 has had development problems to be sure, just like every advanced military aircraft ever built, including the F-22.But if properly supported, the F-35 will be the backbone of America's tactical aviation fleet for decades to come, if -- and it's a big if -- money is not drained away to spend on other aircraft that our uniformed military leadership considers of lower priority or excess to our needs.

Having said that, the F-22 is clearly a capability that we need: a niche, silver-bullet solution for one or two potential scenarios, specifically the defeat of a highly advanced enemy fighter fleet.The F-22, to be blunt, does not make much sense any place else in the spectrum of conflict.Nonetheless, supporters of the F-22 lately have promoted its use for an ever-expanding list of potential missions. These range from protecting the homeland from seaborne cruise missiles to, as one retired general recommended on television, using F-22s to go after Somali pirates, who are, in many cases, teenagers with AK-47s -- (laughter) -- a job we already happen to know is better done, and at rather less cost, by a few Navy SEALs.

These are examples of how far-fetched some of the arguments have become for a program that has cost $65 billion -- and still counting -- to produce 187 aircraft, not to mention the thousands of uniformed Air Force positions that were sacrificed to help pay for it.

In light of all these factors, and with the support of the Air Force leadership, I concluded that 183, the program of record since 2005, plus four more added in the FY '09 supplemental, was a sufficient number of F-22s, and recommended as such to the president.

The reaction from parts of Washington has been predictable, for many of the reasons I described above.The most substantive criticism is that completing the F-22 program means we are risking the future of U.S. air supremacy.And so, to assess this risk, it's worth looking at a real-world -- at the real-world potential threat, and assessing the capabilities that other countries have now or in the pipeline.

Consider that by 2020, the United States is projected to have nearly 2,500 manned combat aircraft of all kinds.Of those, nearly 1,100 will be the most advanced fifth-generation F-35s and F-22s. China, by contrast, is projected to have no fifth-generation aircraft by 2020.And by 2025, the gap only widens.The U.S. will have approximately 1,700 of the most advanced fifth-generation fighters, versus a handful of comparable aircraft for the Chinese.Nonetheless, some portray this scenario as a dire threat to America's national security.

Correspondingly, the recent tests of a possible nuclear device and ballistic missiles by North Korea brought scrutiny to changes in the budget that relate to missile defense.The risk to national security has again been invoked, mainly because the total missile defense budget was reduced from last year.

In fact, where the threat is real or growing -- from rogue states, or from short- to medium-range missiles that can hit our deployed troops or our allies and friends -- this budget sustains or increases funding.

Most of the cuts in this area come from two programs that are designed to shoot down enemy missiles immediately after launch.This was a great idea, but the aspiration was overwhelmed by escalating costs, operational problems and technological challenges.

Consider the example of one of those programs, the airborne laser.This was supposed to put high-powered lasers on a fleet of 747s.After more than a decade of research and development, we have yet to achieve a laser with enough power to knock down a missile in boost phase more than 50 miles from the launch pad -- thus requiring these huge planes to loiter deep in enemy air space to have a feasible shot at a direct hit.

Moreover, the 10 to 20 aircraft needed would cost about a billion and a half dollars each, plus tens of millions of dollars annually, each, for maintenance and operations.The program and operating concept were fatally flawed, and it was time to face reality.So we curtailed the existing program while keeping the prototype aircraft for research and development.

Many of these decisions, like the one I just described, were more clear cut than others.But all of them, insofar as they involved hundreds of billions of dollars and the security of the American people, were treated with the utmost seriousness by the senior civilian and military leadership of the Pentagon.An enormous amount of thought, study, assessment and analysis underpins these budget recommendations, including the National Defense Strategy I issued last summer.

Some have called for yet more analysis before making any of the decisions in this budget.But when dealing with programs that were clearly out of control, performing poorly, and excess to the military's real requirements, we did not need more study, more debate or more delay -- in effect, paralysis through analysis.What was needed were three things:common sense, political will and tough decisions, qualities too often in short supply in Washington, D.C.

All of these decisions involved considering tradeoffs, balancing risks and setting priorities:separating nice-to-haves from have-to- haves, requirements from appetites.We cannot expect to eliminate risk or danger by simply spending more, especially if we're spending on the wrong things.

But more to the point, we all -- the military, the Congress, industry -- have to face some iron fiscal realities.

The last defense budget presented by George W. Bush for fiscal year 2009 was $550 billion for defense.In that budget, the Bush administration proposed, at my recommendation, a fiscal year 2010 budget of $524 billion.The budget just submitted by President Obama to Congress was $534 billion.And so even after factoring in inflation and some of the war costs that were moved from supplemental appropriations, President Obama's defense request represents a modest but real increase over the last Bush request.I know; I submitted them both.(Laughter.)

In total, as the secretary -- as Secretary Daley indicated, by one estimate, our budget adds up to about what the rest of the entire world spends on defense, and only in the parallel universe that is Washington, D.C., would that be considered gutting defense. (Laughter.)The fact is that even if the defense budget had been higher, my recommendations to the president with respect to troubled programs would have been exactly the same, for all of the reasons I described.

There is a more fundamental point, though.If the Department of Defense can't figure out a way to defend the United States of America on a budget of more than a half-a-trillion dollars a year, then our problems are much bigger than anything that can be cured by buying a few more ships and planes.

What is important is to have a budget baseline with a steady, sustainable and predictable rate of growth that avoids extreme peaks and valleys that are enormously harmful to sound budgeting.From the very first defense budget I submitted for President Bush in January of 2007, I have warned against doing what America has done multiple times over the last 90 years by slashing defense spending after every major conflict.The war in Iraq is winding down, and one day so, too, will the conflict in Afghanistan.When that day comes, the nation will again face pressure to cut back on defense spending, as we always have.It is simply the nature of the beast.And the higher our base budget is now, the more unrealistic, the harder it will be to sustain the necessary programs we have, and the more drastic and dangerous the drop-off will be later.

So where do we go from here?Authorization for more F-22s is in both versions of the defense bill working its way through the Congress.The president has indicated that he has real red lines in this budget, including the F-22.

Some might ask, why threaten a veto and risk a confrontation over a couple of billion dollars and for a dozen or so more -- a dozen or so more planes?

The grim reality is that with regard to the defense budget, we have entered a zero-sum game.Every defense dollar devoted to -- diverted to fund excess or unneeded capacity, whether for more F-22s or anything else, is a dollar that will be unavailable to take care of our people, to win the wars we are in, to deter potential adversaries, and to improve capabilities in areas where America is underinvested and potentially vulnerable.That is a risk I cannot accept and one that I will not take.

And with regard to something like the F-22, regardless of whether the number of aircraft at issue is 12 or 200, if we can't bring ourselves to make this tough but straightforward decision -- reflecting the judgment of two very different presidents, two secretaries of defense, two chairmen of the Joint Chiefs of Staff, and the current Air Force secretary and chief of staff -- where do we draw the line?And if not now, when?

If we can't get this right, what on earth can we get right?It is time to draw the line on doing defense business as usual.The president has drawn that line, and that line is with regard to a veto. And it is real.

On a personal note, I joined CIA more than 40 years ago to help protect my country.For just about my entire professional career in government, I have generally been known as a hawk on national security.One criticism of me when I was at CIA was that I overestimated threats to the security of our country.

Well, I haven't changed.I didn't molt from a hawk into a dove on January 20th of 2009.(Laughter.)I continue to believe, as I always have, that the world is and always will be a dangerous and hostile place for my country, with many who would do us harm and many who hate everything we are and everything we stand for.But the reality is, the nature of the threats against us has changed.And so too should the way our military is organized and equipped to meet them.

I believe, along with the senior uniformed military leadership of this nation, that the defense budget we proposed to President Obama and that he sent to the Congress is the best we could design to protect the United States now and in the future, the best we could do to protect our men and women in uniform, to give them the tools they need to deter our enemies, and to win our wars today and tomorrow.

We stand by this reform budget and we are prepared to fight for it.

A final thought.I arrived in Washington 43 years ago this summer.Of all people, I am well aware of the realities of Washington and know that change -- that things do not change overnight.After all, the influence of politics and parochial interests in defense matters is as old as the republic itself.Henry Knox, the first secretary of war, was charged with building the first American fleet. To get the support of Congress, Knox eventually ended up with six frigates being built in six different shipyards in six different states.(Laughter.)

But the stakes today are very high -- with the nation at war, and a security landscape steadily growing more dangerous and unpredictable.I am deeply concerned about the long-term challenges facing our defense establishment, and just as concerned that the political state of play in Washington does not reflect the reality that major reforms are needed, or that tough choices and real discipline are necessary.

We stand at a crossroads.We simply cannot risk continuing down -- going down the same path, where our spending and program priorities are increasingly divorced from the very real threats of today and the growing ones of tomorrow.These threats demand that all of our nation's leaders rise above the politics and parochialism that have too often plagued considerations of our national -- the national defense, from industry to interest groups, from the Pentagon to Foggy Bottom, from one end of Pennsylvania Avenue to the other.

The time has come to draw a line and take a stand against the business-as-usual approach to national defense.We must all fulfill our obligation to the American people to ensure that our country remains safe and strong.Just as our men and women in uniform are doing their duty to this end, we in Washington must do ours.

Thank you very much.(Sustained applause.)

MODERATOR:Thank you very much, Mr. Secretary, for that very thoughtful -- those very thoughtful remarks.

As you know, it’s the custom of the club, even at special meetings, to have a question-and-answer period, and we appreciate your willingness to participate.And so our question committee has come up with some very thoughtful ones.

The first one, and really a personal one -- what leadership or personal experiences as the director of the CIA have helped you in your role as secretary of defense?And how are the two jobs similar, or the major differences between the two?

SEC. GATES:You know, when I get out of this job, I want to write a book about the challenges of leading change in large public institutions -- (laughter) -- because, whether it's CIA or a huge public university or the Department of Defense, they all have some very important characteristics in common.

First, they are all publicly accountable.Second, they are all accountable to a legislature.Third, they all get their budgets from the legislature.Fourth, they all have a permanent cadre who are there before the leader comes and will be there after they're gone -- (laughter) -- and mostly have the opportunity just to outlast them. And they all have either retirees or alumni who consider that they still should have significant influence over how the place gets run. (Laughter.)

So the reality is, what I've learned in all three places is, particularly when it comes to leading change, the central strategy for me has been that it's my responsibility to set the goal, to set the vision, but then to incorporate the professionals in the organization in figuring out how to accomplish that goal:How do we get from here to where we need to be?

Because the truth is, if they participate in that, if they help design the solution, then they will embrace it and they will defend it once you've left.I worked for too many people in the government who came in and tried to impose change from the top, and by fiat.And the change walked out the door the day they left.So the key is bringing the professionals on board, working with them, establishing a productive and constructive partnership.And then I think you have the opportunity for permanent change.

I first learned that lesson in CIA, and I've continued to apply it at A&M and now the Defense Department.

MODERATOR:As mentioned, you are the only secretary to ever stay on with a newly elected president.What were the factors that went into your decision to stay on with this president?And what do you think -- how do we strengthen our civil service to have that kind of strong feeling for the country that you do?

SEC. GATES:Well, I spent most of the first six months of last year trying to build a wall very high that made clear I did not want to stay in the government, I did not want to stay in Washington, D.C., and that I wanted nothing more than to go back to Washington state.Part of the reason I tried to -- and I talked a lot about my little clock that was counting down the days and hours and seconds -- minutes and seconds -- (laughter) -- to when I could depart at noon on January 20th.

The reason I did that was that I knew myself well enough to know that whoever was elected, if I was asked to stay, I would have to do that, and I hoped I would just never get asked the question.

I did get asked the question, and I didn't hesitate, and immediately said that I would be honored to stay.

And I would say this about President Obama.I was deeply impressed that his vision for the country and his concern for the security of the country led him to ask me to stay, because it seemed to me that -- I mean, this had never been done before, after an election, and it seemed to me to reflect his recognition, at a time when we were at war in two different places and major conflicts in two places and many other conflicts of a lesser scale, that what was important for the nation was continuity.And so I had no hesitation of saying yes.

MODERATOR:What would be the major differences stylistically in leadership or the approaches to defense between President Bush and President Obama?

SEC. GATES:Well, journalists have asked me that question on a number of occasions, and I have a stock answer.I have a really good answer to that question, and I will answer when I get paid to answer. (Laughter, applause.)

MODERATOR:With 41 years in Washington, you're questioned a lot!(Laughter.)

What country's situation most worries you?There are obviously enormous issues with Pakistan, Afghanistan, Iran, or North Korea or any other nations you may want to talk about.

SEC. GATES:I think this is option E, all of the above. (Laughter.)I think that the situation -- we face a number of challenges.In fact, I'd tell you, in all -- the president is the eighth president I've worked for, and I do not recall a single time in my entire professional career when I felt that the country faced as complex and, in many respects, dangerous a time as we do now.

I grew up in the Cold War, and most of my CIA career was spent during the Cold War.

We had a singular focus on the Soviet Union, and virtually every problem in the world was seen through the prism of the Cold War competition with the Soviet Union, so it was a relatively simple structure that we were dealing with.There was always the danger of a nuclear catastrophe with the Soviet Union, but the truth of the matter is, through the 45 years of the Cold War, with one or two exceptions, that possibility was really quite remote.

The problem that we face now is, we face a multiplicity of threats.And while none of them are as potentially cataclysmic as a nuclear exchange with the Soviet Union, the likelihood of one or another of them actually happening is, in my view, significantly greater.And so we have a number of countries where we have to be concerned.And where in the past -- I like to tell young officers this.In the past, crises would come up, be dealt with, and go away. Nothing ever seems to go away.

And I remember at the end of the Bush administration an exchange with Secretary Rice, and we looked at each other in the Situation Room:We were there for a meeting on piracy.Who the hell ever thought we'd be dealing piracy?(Laughter.)This is -- this is 18th- century stuff!So these things keep coming up and, just like piracy, they don't go away.And we have to figure out a way to deal with them.

But all of these countries are of concern, but I would say that the one that I think is the most difficult -- and it was difficult in the Bush administration, and it's difficult in this administration -- is the problem of Iran.And it is Iran's determination, apparently, to seek nuclear weapons, the inability of the international community to affect their determination to do that, and how you deal with that -- and where all of the outcomes are negative.If they achieve one, the possibility of a nuclear arms race in the Middle East is very, very real.And if some action is taken to prevent them from getting one, the consequences of that are completely unpredictable, and likely very bad.

So if we -- we, the international community -- it's not just the United States that faces this problem.After all, Iran is going to have missiles that can deliver nuclear weapons to people in their region a lot sooner than they're going to have the capability to deliver one to us.And this is one of the messages that I've delivered to the Russians over the last two or three years, is that -- is that they're a lot closer than we are.

But I think, of all these countries, they're the one that concerns me the most, because there doesn’t seem to be good options that have -- where there's -- where one can have any optimism that a good option can be found.

MODERATOR:What are the steps in the timeline for holding prisoners at Guantanamo Bay?

SEC. GATES:Well, the president, as you well know, has signed an executive order that would close Guantanamo on January 22nd, 2010. The line of states and communities that are willing to have the folks at Guantanamo come to their area seems to be a very short one. (Laughter.)Like non-existent.And as I've said to somebody, I expected 535 separate pieces of legislation in Congress saying "not in my district or state."(Laughter.)

Nonetheless, I think we do need to find a place.There is no doubt that closing Guantanamo is complex, and it is difficult.But the reality is, we have dozens and dozens of very dangerous terrorists in maximum-security prisons in the United States; not one has ever escaped.

And as I said during the Bush administration, interestingly enough, Guantanamo is probably one of the best prisons in the world today, because of all the things that have been done to change it and improve it.Nonetheless, it will, I believe, forever be tainted.And it is something that can be used against us by our adversaries.

And therefore, I certainly agree with the president, and I agreed with the last president, that it needs to be closed.We are moving down that path and I think we will get it done.

MODERATOR:What is the future for the "don't ask, don't tell" policy? Can it successfully be altered and be both humane, as you have said, and meet the original intent of the policy?

SEC. GATES:This is a difficult challenge for us, and there's no reason to soft-pedal it.But the fact is, the president has said he intends to change this policy.But the key is to remember it's not a policy, it's a law.And so before we can change what we do, the Congress has to change the law.And once the law is changed, then we will do what the law says and what the president tells us to do.

In the meantime, as I've indicated, I have our attorneys at the Department of Defense looking to see if there is a way in which we can enforce the law -- we must enforce the law, we've all taken an oath to do that who are in public office -- but is there a way to comply with our oath to enforce the law that finds some way in which we can apply it more humanely?

And one example of that might be what if we did not take into account third parties trying to harm somebody who may be gay in the service, somebody who may have a vendetta or a hatred toward somebody and therefore out them as a way to wreck their career?Is there a way we can not focus on those kinds of reports?

To tell you the truth, I'm not a lawyer and I don't know the answer to that question.And if it were an easy question, I'd probably gotten the answer back from my general counsel several weeks ago.But we are looking at it to see if there's any flexibility so that we can -- can do what we have to do, which is enforce the law, but do it in a way that at least brings some flexibility to the process until the law is changed.

MODERATOR:What's the Department of Defense doing about the rises in military suicides and post-traumatic stress disorder cases?

SEC. GATES:We have a -- every day we lose somebody, in the Department of Defense, it's a tragic day.But we had a particularly tragic day around the middle of June.At that point, we had lost 87 of our young men and women, killed in action in Iraq and Afghanistan. And on that particular day, to date, the year to date, we had also lost 87 to suicide.

This is a problem that every person in the Pentagon is taking very seriously, none more so than the leadership of the Army.We have made huge steps, I would say, in dealing with the post-traumatic stress issue.We have put enormous resources into it, done an enormous amount of educational activity to try and -- and virtually every soldier in the Army has been exposed to training about how to recognize the symptoms of post-traumatic stress, building the buddy principle of looking out to see if your buddy is demonstrating any symptoms of this, educating families so they can recognize the symptoms, creating the capability to provide helpful treatment to these people.

We've done a lot to try and remove the stigma of reporting, and I think we're making -- of seeking help.

And I think we're making significant progress in those areas.

The truth of the matter is, I believe the suicides are a reflection of the stress in the force.And we will do everything in our power to try and have commanders and NCOs and various others recognize people who are in distress and seek help for them.But my guess is we'll ultimately -- the solution for this problem is where our soldiers have more time at home, where there is less stress and where we are not putting people through four and five rotations in an incredibly stressful situation, whether it's in Iraq or Afghanistan.

MODERATOR:There has been much news about attempts to penetrate the Pentagon's computer networks.What are your hopes for a CYBERCOM, which is a new organization designed to protect the computer networks of the military component?

SEC. GATES:Well, this is one of those worlds in which we need to make additional investments.And what I've tried to do here, I -- one of the lines that I've used since January 20th is, there were a number of decisions from the Air Force tanker program to several others, that last fall I punted to my successor -- (laughter) -- only to find myself on the one-yard line, receiving.(Laughter.)I think that -- I'm sorry, I got distracted by my own joke. (Laughter.)

Cyber was one of those areas that I made some -- I made some preliminary structural changes last summer and last fall, but I didn't want to take the next step of creating a full cyber-command.I thought that should be left to my successor.

Once I -- it ended up with my staying in the job, I decided to proceed.The president had directed a 60-day cyber-study by the White House.We participated in that. I held off on my decision to create a cyber-command until that was over and we could see how it fit with the rest of what the administration was going to do on cyber.

This really consolidates a number of different capabilities within the Defense Department and simply puts us in a better organizational position to be able to defend ourselves, to defend the military networks against the intrusions from abroad -- and frankly, also, to exploit what we learn from the people making those kinds of attacks on us.

So it's an area -- it's one of those areas I was referring to in my remarks where we need to make additional investments.And I would say that the civilian side of the government needs to do likewise.

MODERATOR:Mr. Secretary, we are extremely proud of a number of Chicagoans, starting with our president. And let me just acknowledge the next ambassador of the United States to the United Kingdom, Lou Susman.Lou?(Applause.)

Mr. Secretary, on behalf of the Economic Club of Chicago, we thank you for being here, but more importantly, as all Americans, we thank you for your service to our nation, that you have sacrificed to make us a better people.Thank you.(Applause.)

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